News & Announcements

CMS Updates regarding MSPA and MMSEA compliance

10/03/2011

On Friday, September 30, on the eve of what would have been a key implementation date for MMSEA Section 111 reporting, Medicare issued a flurry of alerts. These include a revised timeline, guidance on a few specific topics, and some interesting clues to what could be substantial changes in the recovery process over the next year.

The first alert includes a revised timetable for reporting liability settlements. Settlements with a TPOC Amount over $100,000 will proceed as scheduled, but reporting of TPOC amounts of $50,000 and over has been delayed until Q2 2012 and TPOCs of $25,000+ delayed until Q3 2012. This delay still doesn’t address some of the underlying problems prompting the latest delay, but at least ensures Medicare will not miss out on the largest of their potential recoveries.

The next alert provides some new guidance related to reporting requirements and Medicare’s interest in exposure cases impacted by the 1980 date. Medicare made clear that they have a recovery interest in cases where exposure is claimed on or after 12/5/1980. The alert does, however, offer a bit of a carve-out for cases where there is no exposure claimed past 12/5/1980 and a general release is used. In the past, these cases would have been potentially reportable if the release included a general release of claims as opposed to releasing only claims prior to 1980. This new language allows defendants to still use a general release for their clients without triggering a reporting obligation.

The final alert exempts settlement funds paid out of a Qualified Settlement Fund (QSF) from Section 111 reporting, so long as the funds were deposited into the trust prior to October 1, 2011.This will eliminate reporting for many previously funded inventory settlements where the QSF hasn’t yet paid out any settlement proceeds.

In addition, CMS also issued a memo regarding future medicals.This memorandum was actually posted on the COBC site, but referenced in the MMSEA alerts.It is the first piece of new guidance issued by Medicare regarding Liability Medical Set Aside Arrangements (LMSA) and may signal a renewed focus on the future medical issue. The memo states that when a treating physician completes a certification indicating that treatment is completed at the time of “settlement” that “there is no need for the beneficiary to submit the certification or proposed LMSA amount for review.”Does this mean there IS a requirement to submit a LMSA for review if no such certification exists? We will have to wait and see.

The “What’s New” page on the MMSEA site reveals even further updates. There are a number of features discussed, some of which are available now and others expected to roll-out over the next year.They include a new self-service phone line that will allow customers to get up to date conditional payment amounts.This combined with a proposed MSPRC portal will allow beneficiaries to get conditional payment and demand letters quicker, allowing for more efficient claim resolutions. There is also reference to a new process that will enable beneficiaries to obtain “conditional payment amounts” prior to settlement. I believe they meant to say “final demand letters” prior to settlement, as this is consistent with some of the measures addressed in H.R. 1063 currently before Congress.

Also featured is a new CMS program that would allow a fixed percentage of certain physical trauma liability cases with settlement amounts of under $5,000. This will definitely be of interest to property casualty insurers since a majority of their settlements fall into this category.

One final issue concerns “the implementation of an option that allows for an immediate payment to Medicare for future medical costs that are claimed/released/effectively released in a settlement”. This, combined with the COBC memo, implies CMS is in the process of creating some guidance around Liability Medicare Set Asides.

The Medicare Secondary Payer Recovery Contractor (MSPRC) has temporarily suspending the issuance of Rights and Responsibilities (RAR) letters and Final Demand letters.The alert can be found on the MSPRC’s website at: http://www.msprc.info/

MSPRC is still working cases, and the RAR and Demand letters will be mailed out once appropriate revisions have been made.It appears this temporary suspension is a direct result of Haro v. Sebelius, a federal district court ruling that Medicare is prohibited from requiring payment of a conditional payment demand pending a resolution of an appeal.A detailed analysis of Haro is set forth in my 05-19-11 article below.

This office will continue monitor the situation regarding any other developments related to this alert.

It is important to note that as it related to matters where the RAR letter has already issued, sources have informed us that the conditional payment process will continue.However, on cases where the RAR letter has not yet issued, the conditional payment process will be temporarily delayed.

Alert - MSPRC Collection Activities May Be Limited

05/19/2011

On May 5, 2011, a U.S. District Court in Arizona ordered the Centers for Medicare and Medicaid Services (CMS) to stop demanding of beneficiaries "payment of a MSP reimbursement claim with threats of commencing collection actions before there is a resolution of an appeal or waiver request" and to stop "demanding that attorneys withhold proceeds from their clients pending payment of disputed MSP reimbursement claims.” See Haro v. Sebellius, CV 09-134 TUC DCB, (U.S. Dist. Ct., AZ)(May 5, 2011).

In the underlying cases, the plaintiffs were injured, received medical services conditionally paid for by Medicare, and subsequently received settlement proceeds from a liability insurance company. CMS, followed its longstanding procedure and sent a demand letter to the plaintiffs and the plaintiffs-attorneys notifying them that the reimbursement claim must be paid within 60 days or interest of 13.375% would accrue and collection actions would be initiated. Interestingly, each Plaintiff disputed CMS's conditional payment reimbursement claim. Plaintiff attorneys were additionally told that Medicare's claim must be paid up front out of the settlement proceeds before any distribution occurs.

60 DAY REQUIREMENT

The Court found CMS's 60-day requirement to collect reimbursement claims from beneficiaries "neither rational nor consistent with the statutory scheme providing for waiver and appeal rights." In other words, the Court seems to be saying that it makes no sense to essentially say to the plaintiff, "you can appeal this but, but you have to pay it in sixty days." So, the Court ruled that "collection activities are precluded against beneficiaries, pending resolution of waiver requests or appeals ..."

RECOVERY ACTIONS AGAINST ATTORNEYS

The Court found that:

• Congress never expressly made attorneys responsible for reimbursements to Medicare.

• CMS cannot force an attorney to turn over to CMS what is essentially the injured persons property.

• Collection actions against attorneys are also precluded, pending resolution of waiver or appeals.

• CMS may not preclude plaintiffs-attorneys from disbursing undisputed portions of proceeds to their beneficiary clients.

CLASS ACTION CASE

The Court certified this as a class action case defining the class broadly as persons who are or will be subject to MSP recovery, and from whom defendant has demanded or will demand payment of MSP claims before there have been determinations of the correct amounts through the waiver or appeal process.

This case is going to create a lot of further controversy regarding the obligations to CMS for a liability case. It seems likely that CMS will appeal this decision. We will continue to keep you updated as things unfold.

Bob Foulds is Medicare Set-Aside Consultant Certified

Bob Foulds is one of the first Ohio attorneys to be certified by the International Commission on Health Care Certification as Medicare Set-Aside Consultant Certified (MSCC). The Medicare Set-aside Consultant Certified (MSCC) credential identifies those professionals who have achieved specific pre-approved training in Medicare Set-aside trust arrangements (MSAs), and have demonstrated a breadth of knowledge regarding the development and application of the Medicare set-aside trust arrangement process. Additionally, this credential is designed to express to the consumer that the person holding the MSCC credential has agreed to come under the scrutiny of a certifying review board (ICHCC), to be peer reviewed, and to adhere to a set of standards governing ethics and professional behaviors.

MSAs are the product of a meticulous review of the medical records by trained professionals who are then able to put the totality of the medical circumstances into a well-reasoned and fair submission for approval to the Centers for Medicare Services (CMS). The primary goal of a proper MSA proposal to CMS is to limit the exposure of settlement proceeds to exhaustion on the plaintiff/claimant's future medical expenses. Thus, an MSA will segregate the projection for future, injury-related medical services and prescription drugs of the type covered by Medicare and use the projected costs for such items and services to arrive at a reasonable MSA funding amount. This information, with supporting documentation, is required for any CMS review of a proposed MSA. In each case, inadequate or inaccurate completion of an MSA or other submission to CMS can lead to a denial of benefits for a Medicare beneficiary and can lead to unwanted and perilous litigation.

The Medicare Secondary Payer Act (MSPA), as amended by the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA), provide that Medicare will not pay for any future medical expenses after a lump sum settlement is received until the total future medical expenses related to the employee's injury equals the amount of the lump sum settlement which was allocated to future medical expenses. 42 C.F.R. §411.46(d)(2).

It is recommended that regular implementation of MSAs be adopted in the liability, no-fault, medpay, uninsured/underinsured and self-insured claims resolution process in order to demonstrate the parties involved reasonably considered Medicare's lien interest at the time of settlement in order to avoid future litigation, including legal malpractice claims by the claimants and subrogation claims by CMS against the claimants, attorneys, insurers, and/or others involved in the claim.

Please contact Bob if you have any questions regarding the MSA process, reporting requirements under the MMSEA, or other questions concerning the Medicare Secondary Payer Act and its ramifications on personal injury settlements.

MSPA RRE Reporting Requirements for Loss of Consortium Claims - Be Careful When Drafting the Release

07/01/2010

During a June 30, 2010 Town Hall teleconference put on by or on behalf of Centers for Medicare and Medicaid Services ("CMS"), CMS representatives addressed Medicare Secondary Payer Act reporting responsibilities pertaining to loss of consortium claims. CMS requires RREs to report such claims only if the language in the release executed by a loss of consortium claimant can be interpreted to mean the non-injured spouse is accepting settlement funds in exchange for a release of claims for medical payments and/or person injury claims, even if no such claims were ever made.

For instance, many carriers and practitioners use standard releases where, for instance, a spouse or child has a personal injury claim and the other spouse or parent presents a loss of consortium claim. Such standard releases usually indicate all of the parties to the settlement "hereby release, waive and relinquish all claims for personal injury, loss of consortium, wrongful death" etc. If such releases are used once the RRE reporting period begins in 2011, then the RRE will have to separately report both claims - that of the injured party and the party claiming loss of consortium

Therefore, it is advised that any release submitted to a claimant whose sole claim is for loss of consortium, property damage or some other non-medical/non-injury claim, strictly identify the claim(s) being released and specify that the payment thereto does not pertain to an injury or for medical expenses incurred by that claimant. This will prevent reporting errors and an exposure to fines for failing to report.

Please contact me if you or your company requires a review and/or revision of its standardized releases.